All posts tagged BofA/SEC

A month ago WSJ’s law team wrote about how the two law firms that advised Bank of America and Merrill Lynch in their merger were grabbing some of the spotlight in BacMerSaga. (LB background here and here.)

Given the plethora of regulators investigating whether BofA violated securities laws by not disclosing information about executive bonuses at Merrill or Merrill’s deteriorating condition prior to the shareholders’ vote on the deal, we wrote that Wachtell Lipton, BofA’s counsel, and Shearman and Sterling, Merrill’s counsel, might face further scrutiny. That would particularly be the case if the bank or its executives should waive attorney-client privilege.

Ta-da! Wouldn’t you know it, BofA’s board on Friday decided to waive attorney-client privilege on advice provided during the bank’s purchase of Merrill as it seeks a more conciliatory approach … Read More »

Of all the legal news last week, there’s one development that put fear into the hearts of both federal securities regulators and corporate lawyers: BacMerSaga. (Pronounced “back-MERCE-uh-guh.”) Specifically, the rejection of a proposed settlement between the Securities and Exchange Commission and Bank of America over the bank’s public disclosures (or lack thereof) of bonuses at Merrill Lynch before its shareholders voted to purchase Merrill.

For lawyers, the fear crept in when U.S. District Judge Jed Rakoff asked the SEC why it wasn’t seeking penalties from the bank’s M&A lawyers at Wachtell Lipton who, according to the SEC, “made the relevant decisions concerning the disclosure of the [Merrill] bonuses.” It’s unclear right now what the SEC will ultimately do about Wachtell, if anything. There is also the potential, equally scary for corporate lawyers, that the veil of attorney-client privilege in this case or another possible BacMerSaga case could be pierced. . . . Read More »

Aside from the drama expected to take place this weekend — would Mad Men and 30 Rock clean up at the Emmy’s? (a: pretty much); would the Cowboys reign supreme in their new stadium’s christening? (a: no) — we were also treated to a less predictable weekend storyline: one congressman’s rather aggressive push into the BacMerSaga.

The chairman of the House Committee on Oversight and Government Reform on Friday told Bank of America that it has questions concerning disclosures made surrounding the bank’s purchase of Merrill Lynch. The panel’s chairman, Edolphus Towns (D-NY), told the bank it can’t use the attorney-client privilege when dealing with Congress. Click here for more, from the NYT; here for earlier coverage of BacMerSaga, from the LB.

In a letter on Friday, Towns (pictured) said the bank must divulge when it became aware of the enormous losses at Merrill last year, when it received a commitment from the federal government for a second round of bailout money and what legal advice its management received about whether it had to disclose those developments . . . Read More »

We have bad news for all those LBers who are already tiring of the Rakoff/SEC/Bank of America/Merrill Lynch situation: With each passing day it becomes clearer that it’s going to be on our radar screen for some time to come. Our advice: grab some popcorn, kick your feet up, and dig in. It could be quite a ride.

Today’s news: New York attorney general Andrew Cuomo on Thursday issued subpoenas to five Bank of America board members — all of whom were on the audit committee at the time the BofA/Merrill deal went down last fall. Click here for the WSJ story; here for the NYT story; here for previous LB coverage.

Cuomo, who also is weighing possible civil fraud charges against BofA Chief Executive Kenneth Lewis, also plans to subpoena all 15 of the Charlotte, N.C., company’s directors as of early December, when shareholders approved the deal. On Wednesday, Cuomo said he wonders broadly where the boards were in this financial crisis, and whether BofA directors “protected the rights of shareholders, were they misled, or were they little more than rubber stamps for management`s decision-making?”

The big law-n-business story of the summer (and possibly the year?) continues to get ample coverage from our own WSJ, as well as other pubs. Wednesday’s Journal contains two articles on Judge Jed Rakoff’s decision to shoot down the proposed $33 million settlement between the SEC and Bank of America. Let’s briefly take you through both of them. (Click here for LB background on the BofA/SEC case.)

Spotlight on the Lawyers: Because this is a law blog, first, let’s tackle the lawyers. WSJ reporters Nathan Koppel, Amir Efrati and yours truly write today about the awkward position in which Judge Rakoff has placed both Wachtell Lipton and Shearman & Sterling. In his ruling, Rakoff funneled some of his ire toward the lawyers involved. The SEC stated in court filings that lawyers “made the relevant decisions concerning the disclosure of the [Merrill] bonuses” at the heart of the case. Judge Rakoff retorted: “If that is the case, why are the penalties not then sought from the lawyers?”

Legal experts say that the SEC is likely to take a closer look at the role of the lawyers going forward. And if either BofA executives . . . Read More »

Manhattan federal judge Jed Rakoff excoriated the SEC and Bank of America in his opinion issued Monday, in which he refused to sign off on the parties’ proposed $33 million settlement. That, for us media types, was a lot of fun.

But what happens now?

On paper, it’s rather straightforward: the SEC will take its charges against BofA to trial, slated for Feb. 1 of next years.

But it’s all a bit awkward now, no? For starters, it’s sort of hard to believe that the SEC and BofA can, after thinking they’d kissed and made up, start fighting again, just like that.

Indeed, the SEC has few options — and none of them are all that good, says Wayne State’s Peter Henning, to Bloomberg. The SEC could try the case. But that’s risky: what if the bank actually has strong defenses? It could file a new lawsuit against individual executives . . . Read More »

This just in: Manhattan federal judge Jed Rakoff has rejected the proposed $33 million settlement between the Bank of America and the SEC. The SEC had alleged that BofA “materially lied” in shareholder communications last year about bonuses to Merrill Lynch employees. Click here for the early WSJ story; here for Rakoff’s ruling; here, here, here, here, and here for earlier LB posts.

The SEC and Bank of America had sought the judge’s approval of a consent decree to resolve charges that the bank concealed an agreement to pay up to $5.8 billion in bonuses to Merrill executives. But, in an unusual move, the judge said no. On Monday, he set a Feb. 1 trial date on the allegations in his New York courtroom.

For starters, Rakoff found the proposed settlement unfair:

It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank’s alleged misconduct . . . Read More »

Did you ever have one of those teachers or professors who would let you submit an assignment over and over again until it was worthy of an ‘A’ grade? The good news was that with enough work, you could bring home a good grade. The bad: well, what a completely annoying hassle.

We were reminded of that scenario this morning when reading the latest on the Bank of America/SEC situation. Manhattan federal judge Jed Rakoff (pictured), playing the role of the teacher, has sent both pupils back to the table yet again, saying their latest disclosure — part of a broader attempt to get Rakoff to sign off on a $33 million settlement between the parties — was insufficient.

In short, Rakoff wants the explanation behind why a Bank of America proxy statement last November misled investors about bonuses for employees at Merrill Lynch, which was about to be acquired by the bank. On Tuesday, he stated another desire . . . Read More »

Anyone with serious interest in the situation concerning Manhattan federal judge Jed Rakoff’s failure to approve a settlement between the SEC and Bank of America has got a trove of new information to deal with today.

Let’s try to get you up to speed. Judge Rakoff recently refused to sign off on a $33 million settlement of an SEC civil lawsuit targeting the bank for what it disclosed about the certain executive bonuses before a December shareholder vote. Rakoff, feeling that the sides hadn’t adequately addressed who was responsible for the situation, ordered each side to submit further briefing on the point. Click here, here and here for previous LB coverage.

On Monday, those briefs came in. Perhaps most eye-popping to us: both sides’ pointing fingers at BofA and Merrill’s outside lawyers for detailing the deal. Those lawyers: Wachtell, Lipton, which represented BofA, and Shearman & Sterling, which repped . . . Read More »

We’re waiting for someone to say something negative about Manhattan federal judge Jed Rakoff, because, to date, he’s had a career without a real misstep. Along the way, he’s developed a reputation that likely stirs some envy among lawyers and colleagues on the bench. (We often hear lawyers preface their comments about federal judges by saying things like “Well, he’s no Rakoff, but he’s plenty smart.”)

In any event, Rakoff’s currently proving himself to be, if nothing else, unafraid to singlehandedly take on some heavyweight institutions and their lawyers. At a hearing Monday, Rakoff declined to approve the $33 million settlement reached by the SEC and Bank of America over whether the bank failed to disclose to investors that Merrill Lynch agreed to pay billions of dollars in bonuses on the eve of the banks’ merger. Click here and here and here for stories from the WSJ, NYT and Bloomberg, respectively.

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The Law Blog covers the legal arena’s hot cases, emerging trends and big personalities. It’s brought to you by lead writer Jacob Gershman with contributions from across The Wall Street Journal’s staff. Jacob comes here after more than half a decade covering the bare-knuckle politics of New York State. His inside-the-room reporting left him steeped in legal and regulatory issues that continue to grab headlines.

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